"Kevin was in a great mood and even talked about a new song he is working on, called 'Daddy's Home,' " says a source at Mansion on South Beach – where K-Fed (as host) and his party of 10 and a security guard stayed until 4 a.m. Saturday, following a late dinner at Miami's Michy's, an intimate and upscale restaurant.
"He has put a lot of time and effort into writing and rehearsing it, but says it is not quite ready yet," the source tells PEOPLE.
At Mansion, Federline, dressed in an over-sized, blue, long-sleeved, oxford shirt and jeans, spent much of the night chatting with the club's host Lyndon Smith, another single dad. "We talked about our kids and parenting and what that's all about," Smith says.
Although multiple bottles of champagne were sent to Federline, he preferred to drink water. Not that the bubbly went to waste – he sprayed an entire bottle on the dancing crowd.
Scrubs star Zach Braff and Donald Faison, with Cacee Cobb, Jessica Simpson's former assistant, came late and hung with Federline while he danced with his group of friends, including one guy from his hometown.
Good Dance Moves"Kevin is a great dancer with some very complicated moves," says another source at Mansion. "He wasn't with any one girl in particular. He was friendly and nice to everyone and in a wonderful mood."
Federline, 30, had been seen in the late afternoon checking into the Gansevoort Hotel on South Beach, where he asked staffers to call him "Kevin" and even signed autographs.
"Kevin seemed happy and was very gracious," says an eyewitness. "He stopped and took photos with anyone who asked."
Saturday brought more high-living for K-Fed and his entourage, who spent the day on a private luxury yacht with Chris Jones of the Opium Group and Mansion host Smith, who brought Federline to Miami Beach after he had recently appeared as "Father of the Year" at the Opium Group's club Prive in Las Vegas.
"We hung on the boat all day and late into the night," a source at sea tells PEOPLE. "We just relaxed, fished, ate, swam and had a great time."
Much later on, the group went to SET, an old Hollywood-themed club on Lincoln Rd. "Kevin said he had a great boys' weekend, but was happy that in a few hours he would be back with his kids," said a source.
With additional reporting by JULIE KAY and DEBI SPRINGER